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Question : Which of the following statements is correct?

Option 1: Debt to equity ratio indicates the proportion of funds which are acquired by long-term borrowings in comparison to shareholder's funds.

Option 2: The debt to equity ratio is calculated to ascertain the soundness of the long-term financial policies of the firm.

Option 3: Debt Equity Ratio $=\frac{\text { Debt }}{\text { Equity }}$

Option 4: All of the above


Team Careers360 10th Jan, 2024
Answer (1)
Team Careers360 12th Jan, 2024

Correct Answer: All of the above


Solution : Answer = All of the above.

All of the statements are correct regarding the Debt to Equity ratio. It indicates the proportion of funds acquired through long-term borrowings relative to shareholder's funds, assesses the soundness of long-term financial policies and is calculated by dividing total debt by total equity, providing insights into the company's leverage and financial stability.
Hence, the correct option is 4.

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